Redcorp, New Gold rattled by credit market disruptions (August 16, 2007)

Vancouver – News from Redcorp Ventures (RDV-T, RDFVF-O) stating a portion of its $240 million in cash investments was in trusts effected by the global credit market crunch sent the company’s stock plummeting as much as 64% in August 16th trading.

Recently closing a $252-million debt and equity offering for development of its planned Tulsequah polymetallic mine in northwestern British Columbia, the company placed $102.2 million into five separate trusts managed by the Coventree Capital Group.

On August 13th and 14th, Coventree announced it was experiencing market disruptions and was unable to meet its repayment obligations until its liquidity providers fund such repayments.

Redcorp points out that the balance of its investments, approximately $137.5 million, are in Royal Bank of Canada bearer discount notes and various term deposits with major Canadian banks; and that they provide sufficient funds to ensure there will be no disruption to its activities while it resolves the matter.

Later in the day on August 16th the company announced it received a portion ($10.8 million) of the funds outstanding from its matured short-term investments.

Redcorp shares managed a substantial recovery by the end of the trading day but still closed down 24%, or 9, at 28 apiece on volume of 50.4 million shares.

Earlier this year Redcorp tabled its feasibility study for Tulsequah. The base case mining scenario uses a probable reserve of 5.4 million tonnes grading 1.4% copper, 1.2% lead, 6.3% zinc, 2.6 grams gold per tonne and 93.7 grams silver per tonne and models a 2,000-tonnes-per-day underground operation over an 8-year mine-life.

Average annual metal output is forecast at 88.6 million lbs. (40,200 tonnes) zinc, 19.8 million lbs. (9,000 tonnes) copper, 8.6 million lbs. (3,900 tonnes) lead, 1.7 million oz. silver and 50,000 oz. gold.

Another prospective B.C. mine developer, New Gold (NGD-T, NGD-X), also rattled its shareholders with news that a portion of its $420 million in cash holdings was invested in Coventree sponsored funds.

A note of $6.5 million was not paid on its August 13th due date and remains outstanding. New Gold has an additional $152 million in Coventree sponsored funds with varying maturity dates out to September 7, 2007. The company believes it has sufficient cash available to maintain its development schedule, and financial obligations, for its New Afton underground copper-gold project located near Kamloops, B.C.

Shares of New Gold dropped as much as 36% to touch $4.01 apiece before taking back some ground to close at $5.10, down $1.16 in August 16th trading.